Farm Service Agency

Contents

PagePurpose Statement ..................................................................................................................................... 24-1Statement of Available Funds and Staff Years........................................................................................ 24-11 Permanent Positions by Grade and Staff Year Summary ........................................................................ 24-12Motor Vehicle Fleet Data ........................................................................................................................ 24-13 Shared Funding Projects.......................................................................................................................... 24-14

SALARIES AND EXPENSES Appropriations Language.......................................................................................................... 24-16Lead-off Tabular Statement ...................................................................................................... 24-17 Project Statements..................................................................................................................... 24-18Justifications.............................................................................................................................. 24-20 Geographic Breakdown of Obligations and Staff-Years ........................................................... 24-23Classification by Objects........................................................................................................... 24-24Status of Programs .................................................................................................................... 24-25

PROGRAMS State Mediation Grants

Appropriations Language............................................................................................ 24-40Lead-off Tabular Statement ........................................................................................ 24-40 Project Statement ........................................................................................................ 24-41Justifications ............................................................................................................... 24-41 Geographic Breakdown of Obligations....................................................................... 24-42Classification by Objects ............................................................................................ 24-43Status of Programs ...................................................................................................... 24-44

Grassroots Source Water Protection ProgramAppropriations Language............................................................................................ 24-46Lead-off Tabular Statement ........................................................................................ 24-46 Project Statement ........................................................................................................ 24-47Justifications .............................................................................................................. 24-47 Geographic Breakdown of Obligations....................................................................... 24-48Classification by Objects ............................................................................................ 24-49Status of Programs ...................................................................................................... 24-50

Dairy Indemnity ProgramAppropriations Language............................................................................................ 24-51Lead-off Tabular Statement ........................................................................................ 24-51 Project Statement ........................................................................................................ 24-52Justifications .............................................................................................................. 24-52 Geographic Breakdown of Obligations....................................................................... 24-53Classification by Objects ............................................................................................ 24-53Status of Programs ...................................................................................................... 24-54

Agricultural Credit Insurance FundAppropriations Language............................................................................................ 24-55Lead-off Tabular Statement ........................................................................................ 24-56 Project Statements....................................................................................................... 24-57Justifications .............................................................................................................. 24-60 Geographic Breakdown of Obligations....................................................................... 24-61Classification by Objects ............................................................................................ 24-68Status of Programs ...................................................................................................... 24-69

Reforestation Pilot ProgramLead-off Tabular Statement ........................................................................................ 24-72 Project Statement ........................................................................................................ 24-73Justifications .............................................................................................................. 24-73 Geographic Breakdown of Obligations....................................................................... 24-74Classification by Objects ............................................................................................ 24-74Status of Programs ...................................................................................................... 24-75

Emergency Conservation ProgramLead-off Tabular Statement ........................................................................................ 24-76 Project Statements....................................................................................................... 24-77Justifications .............................................................................................................. 24-77 Geographic Breakdown of Obligations....................................................................... 24-78Classification by Objects ............................................................................................ 24-79Status of Programs ...................................................................................................... 24-80

Agricultural Disaster Relief Trust FundLead-off Tabular Statement ........................................................................................ 24-83 Project Statements....................................................................................................... 24-84Justifications .............................................................................................................. 24-84 Geographic Breakdown of Obligations....................................................................... 24-85Classification by Objects ............................................................................................ 24-86Status of Programs ...................................................................................................... 24-87

USDA Supplemental Assistance ProgramLead-off Tabular Statement ........................................................................................ 24-88 Project Statement ........................................................................................................ 24-89Justifications .............................................................................................................. 24-89 Geographic Breakdown of Obligations....................................................................... 24-90Classification by Objects ............................................................................................ 24-90Status of Programs ...................................................................................................... 24-91

Emergency Forest RestorationLead-off Tabular Statement ........................................................................................ 24-92 Project Statement ........................................................................................................ 24-93Justifications .............................................................................................................. 24-93 Geographic Breakdown of Obligations....................................................................... 24-94Classification by Objects ............................................................................................ 24-94Status of Programs ...................................................................................................... 24-95

Pima Agriculture Cotton Trust FundLead-off Tabular Statement ........................................................................................ 24-96 Project Statement ........................................................................................................ 24-97Justifications .............................................................................................................. 24-97 Classification by Objects ............................................................................................ 24-98

Agricultural Wool Manufacturers Trust FundLead-off Tabular Statement ........................................................................................ 24-99 Project Statement ...................................................................................................... 24-100Justifications ............................................................................................................ 24-100 Classification by Objects .......................................................................................... 24-101

SUMMARY OF BUDGET AND PERFORMANCE Summary of Budget and Performance .................................................................................... 24-102

FARM SERVICE AGENCY

Purpose Statement

The Farm Service Agency (FSA) was established October 13, 1994, pursuant to the Department of Agriculture Reorganization Act of 1994, Public Law (P.L.) 103-354, as amended by the Federal Agriculture Improvement and Reform Act of 1996, P.L. 104-127. FSA's mission is to deliver timely, effective programs and services to America’s farmers and ranchers to support them in sustaining our Nation’s vibrant agricultural economy, as well as to provide first-rate support for domestic and international food aid efforts. FSA provides the personnel to carry out many of the programs funded by the Commodity Credit Corporation (CCC) and is responsible for the overall coordination of budgetary and fiscal matters of the CCC.

FSA administers programs authorized by the Agricultural Act of 2014 (Public Law 113-79), commonly called the 2014 Farm Bill and a variety of other laws. Descriptions of the programs administered by FSA and funded by CCC appear in the CCC Purpose Statement of these Explanatory Notes. The following is a summary of FSA’s programs and activities.

Farm Loan Programs: FSA's farm loan programs provide a safety net for farmers and ranchers temporarily unable to obtain sufficient credit elsewhere to finance their operations at reasonable rates and terms.

Most farm loan programs administered by FSA are authorized by the Consolidated Farm and Rural Development Act, P.L. 87-128, August 8, 1961, as amended. Subtitle A of this act authorizes direct and guaranteed farm ownership and conservation loans. Subtitle B authorizes direct and guaranteed operating loans. Subtitle C authorizes emergency loans. The Agriculture Credit Improvement Act of 1992, P.L. 102-554, establishes special assistance to qualified beginning farmers and ranchers to enable them to conduct viable farming and ranching operations. Indian Tribal Land Acquisition Loans and Highly Fractionated Indian Land Loans are authorized by Public Law 91-229, April 11, 1970, as amended.

The Agricultural Credit Insurance Fund Program Account was initiated in FY 1992, as required by the Federal Credit Reform Act of 1990. The account shows the direct loan obligations and guaranteed loan commitments of FSA's farm loan programs and the associated subsidy costs. Subsidy costs are obtained by estimating the net present value of the Government’s cash flows resulting from direct and guaranteed loans made through this account.

The programs funded by this account are:

• Farm Ownership Loans. FSA makes direct and guaranteed loans for family farmers to purchase farmland; make capital improvements to a farm or ranch; restructure their debts (guaranteed loans only), including utilizing their real estate equities to refinance heavy short-term debts; and make adjustments in their operations to comply with local sanitation and pollution abatement requirements, keep up with advances in agricultural technology, better utilize their land and labor resources, or meet changing market requirements.

Loans are made for a term of 40 years or less. A direct loan may not exceed $300,000 and a guaranteed loan may not exceed $1,399,000, adjusted annually. The interest rate for direct loans is determined by the Secretary of Agriculture and does not exceed the cost of money to the Government plus up to 1 percent. However, loans to limited resource borrowers (farmers who need special supervision or who cannot afford the regular interest rate due to low income) bear interest of not more than one-half of the Treasury rate for marketable obligations with maturities of 5 years plus not more than 1 percentage point, with a minimum of 5 percent. Effective with the 2008 Farm Bill, interest rates for beginning farmer down-payment loans are established at 4 percentage points less than the regular borrower rate, with a minimum of 1.5 percent. Effective with the 2014 Farm Bill, interest rates for joint financing loans (loans made in conjunction with a commercial lender providing over 50 percent

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of the credit) are established at 2 percentage points less than the regular borrower rate, but no less than 1 percent. The interest rate for guaranteed loans is negotiated by the lender and borrower.

At least 40 percent of the amounts appropriated for guaranteed farm ownership loans will be reserved for beginning farmers and ranchers during the first 6 months of the fiscal year. Also, at least 75 percent of the amount appropriated for direct farm ownership loans will be reserved for qualified beginning farmers and ranchers.

• Farm Operating Loans. Farm operating loans are targeted to family farmers unable to obtain credit from private sources at reasonable rates and terms and are accompanied by supervisory assistance in farm and financial management.

Operating loans may be made for paying costs incident to reorganizing a farming system for more profitable operations; purchasing livestock, poultry, and farm equipment; purchasing feed, seed, fertilizer, insecticides, and farm supplies and meeting other essential operating expenses; financing land and water development, use, and conservation; and refinancing existing indebtedness. In FY 2013, FSA implemented the Microloan program. Microloans are direct farm operating loans with a shortened application process and reduced paperwork designed to meet the needs of smaller, non-traditional, and niche type operations.

Farm operating loans are for periods of 1 to 7 years depending on loan purposes. The loan limit is $300,000 for a direct loan, $50,000 for a Microloan and $1,399,000, adjusted annually, for a guaranteed loan. The interest rate for direct loans is determined by the Secretary of Agriculture and does not exceed the cost of money to the Government plus up to 1 percent. However, loans to limited resource borrowers bear interest of not more than one-half of the Treasury rate for marketable obligations plus not more than 1 percentage point, with a floor of 5 percent. The interest rate for guaranteed loans is negotiated by the lender and borrower and may be subsidized under the interest assistance program.

The 2014 Farm Bill revisions expand the types of entities eligible, provide favorable interest rates for joint financing arrangements, increase loan limits for microloans, make youth loans available in urban areas, and eliminate term limits for guaranteed operating loans.

The Agricultural Credit Improvement Act of 1992, Public Law 102-554, requires at least 50 percent of the amounts available for direct farm operating loans be reserved for qualified beginning farmers and ranchers during the first 11 months of the fiscal year.

• Emergency Loans. Emergency loans are made available in designated areas (counties) and in contiguous counties where property damage and/or severe production losses have occurred as a direct result of a natural disaster. Areas may be declared a disaster by the President or designated for emergency loan assistance by the Secretary of Agriculture, or by the FSA Administrator for physical loss loans only.

Emergency loans are made to established, eligible, family-size farms and ranches (including equine farms and ranches) and aquaculture operators who have suffered at least a 30 percent loss in crop production or a physical loss to livestock, livestock products, real estate, or chattel property. Partnerships and private domestic corporations and cooperatives may also qualify, provided they are primarily engaged in agricultural or aquaculture production. Loans may be made only for actual losses arising from natural disasters. A farmer who cannot receive credit elsewhere is eligible for an actual loss loan of up to $500,000 or the calculated actual loss, whichever is less, for each disaster, at an interest rate of 1 percent above the direct operating loan interest rate. Actual loss loans may be made to repair, restore, or replace damaged or destroyed farm property, livestock and livestock products, and supplies and to compensate for disaster-related loss of income based on reduced production of crops and/or livestock products. Eligible farmers may use actual loss loan funds to pay costs incident to

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reorganizing a farming system to make it a sound operation that is approximately equivalent in earning capacity to the operation conducted prior to the disaster. Under certain conditions, loan funds may be used to buy essential home equipment and furnishings and for limited refinancing of debts.

All emergency loans must be fully collateralized. The specific type of collateral may vary depending on the loan purpose, repayment ability, and the individual circumstances of the applicant. If applicants cannot provide adequate collateral, their repayment may be considered as collateral to secure the loan. Repayment terms for actual loss loans also vary according to the purposes of the loan, type of collateral available to secure the loan, and the projected repayment ability of the borrower. Loans for actual production or physical losses to crops, livestock, supplies, and equipment may be scheduled for repayment for up to 7 years. Under some conditions a longer repayment period may be authorized for production loss loans, but not to exceed 20 years. Generally, real estate will be needed as security when a loan term of more than 7 years is authorized. Loss loans for actual losses to real estate will generally be scheduled for repayment within 30 years but under some conditions may be scheduled for up to 40 years. Applications for emergency loans must be received within 8 months of the county’s disaster or quarantine designation date.

• Indian Tribal Land Acquisition Loans. These loans allow Native Americans to repurchase tribal lands and maintain ownership for future generations. They are limited to acquisition of land within the defined boundaries of a tribe's reservation. To be eligible, a tribe must be recognized by the Secretary of the Interior or be a tribal corporation established pursuant to the Indian Reorganization Act. In addition, a tribe must be without adequate funds to acquire the needed land and be unable to obtain sufficient credit elsewhere for the purchase. The tribe must also have a satisfactory management and repayment plan. Loan interest rates are fixed for the life of the loan at the current interest rate charged by FSA on the loan closing date and are made for a period not to exceed 40 years.

• Boll Weevil Eradication Loans. Boll weevil eradication loans provide assistance to producer associations and State governmental agencies to eradicate boll weevils. Loans are made in major cotton producing States.

• Conservation Loans. These are made as guaranteed loans to eligible borrowers to cover the cost of implementing qualified conservation projects. Loans for conservation projects must be part of a USDA-approved conservation plan. Eligible conservation plans may include projects for construction or establishment of conservation structures, forest and permanent cover, water conservation and waste management systems, improved permanent pasture, or other projects that comply with Section 1212 of the Food Security Act of 1985, and other purposes approved by the Secretary. Eligible borrowers include farmers, ranchers, and other entities controlled by farmers and ranchers and primarily and directly engaged in agricultural production. The program gives priority to qualified beginning farmers, ranchers, socially disadvantaged farmers or ranchers, owners or tenants who use the loans to convert to sustainable or organic agricultural production systems, and producers who use the loans to build conservation structures or establish conservation practices. Direct conservation loans have a maximum indebtedness of $300,000, and guaranteed loans have a maximum indebtedness of $1,399,000. The repayment term for direct conservation loans is a maximum of 7 years for loans secured by chattel and 20 years for real estate, unless the applicant requests a lesser term. The interest rate for direct conservation loans is equivalent to the direct farm ownership rate and the guaranteed conservation loans interest rate is determined by the lender. Loan guarantees are 80 percent of the principal amount of the loan (90 percent for beginning and socially disadvantaged farmers), and loans are to be disbursed geographically to the maximum extent possible.

• Highly Fractionated Indian Land Loans. These loans provide a way for tribes and tribal members to obtain loans to purchase fractionated interests through intermediary lenders. FSA lends from a revolving fund account to eligible intermediary lenders who will relend loan funds to purchasers of highly fractionated lands. Eligible purchasers are Indian tribes, tribal entities and members of both. The loan program is limited to purchases of fractionated interests of agricultural land. Eligible

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intermediaries must be lenders with knowledge and familiarity of working with Indian Country and experience in working with the Bureau of Indian Affairs.

• State Mediation Grants: Section 502 of the Agricultural Credit Act of 1987, P.L. 100-233, authorized the Secretary of Agriculture to help States develop and operate mediation programs to assist agricultural producers, their creditors, and other persons directly affected by the actions of USDA in resolving disputes confidentially, efficiently, and cost effectively compared to administrative appeals, litigation, and bankruptcy. Under the program, FSA makes grants to States to support mediation programs established under State statute and certified by FSA. Grants can be up to a maximum of $500,000 annually and must not exceed 70 percent of the State's cost of operating its program for the year. The 2014 Farm Bill extended the program through 2018.

Originally designed to address farm loan disputes, the program was expanded by the Department of Agriculture Reorganization Act of 1994, P.L. 103-354, to include other agricultural issues such as wetland determinations, conservation compliance, rural water loan programs, grazing on National forest system lands, and pesticides. Pursuant to the authority in this statute, the Secretary of Agriculture acted in 2000 to add USDA rural housing and business loans and crop insurance disputes to the list of issues that can be mediated.

The Grain Standards and Warehouse Improvement Act of 2000, P.L. 106-472, clarified that certified State programs can provide mediation training and consulting services to producers, lenders, and USDA agencies within the context of mediation for a specific case.

Farm Programs: The Agricultural Act of 2014 (Public Law 113-79), commonly called the 2014 Farm Bill, was signed by President Obama on February 7, 2014. The 2014 Farm Bill repeals certain programs, continues some programs with modifications, and authorizes several new programs administered by the Farm Service Agency (FSA). Most of these programs are authorized and funded through 2018.

OVERVIEW

• Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) replaced the Direct and Counter Cyclical Program (DCP) and the Average Crop Revenue Election (ACRE) Program in the 2014 Farm Bill. PLC provides payments when the effective price of a covered commodity is less than the statutory reference price for that commodity. ARC payments are issued when actual revenues are less than the guarantee. There are two types of ARC, County and Individual.

• The Marketing Assistance Loan Program (MAL) and sugar loans continue mostly unchanged. The Dairy Margin Protection Program (MPP-Dairy) provides coverage for catastrophic drops in production margin, when the national dairy production margin is less than $4.00 per hundredweight. This coverage is provided at no cost, other than a $100 annual administrative fee. MPP-Dairy also offers buy-up coverage that provides payments when margins are between $4.00 and $8.00 per hundredweight.

• The Conservation Reserve Program (CRP), USDA’s largest conservation program, continues through 2018 with an annually decreasing enrolled acreage cap. The contract portion of the Grassland Reserve Program enrollment has been merged with CRP.

• The Noninsured Crop Disaster Assistance Program was expanded to include protection at higher coverage levels, similar to buy-up provisions offered under the federal crop insurance program. The Livestock Forage Disaster Program (LFP), the Livestock Indemnity Program (LIP), the Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish (ELAP), and the Tree Assistance Program (TAP) are considered permanent programs.

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ADJUSTED GROSS INCOME: Adjusted gross income (AGI) provisions have been simplified and modified. Producers whose average AGI exceeds $900,000 during a crop, fiscal, or program year are not eligible to participate in most programs administered by FSA and the Natural Resources Conservation Service (NRCS). Previous AGI provisions distinguished between on-farm and nonfarm AGI.

PAYMENT LIMITATIONS: The total amount of payments received, directly and indirectly, by a person or legal entity (except joint ventures or general partnerships) for Price Loss Coverage, Agricultural Risk Coverage, marketing loan gains, and loan deficiency payments (other than for peanuts), may not exceed $125,000 per crop year. A person or legal entity that receives payments for peanuts has a separate $125,000 payment limitation. Separate payment limitations also apply for certain conservation programs.

For the livestock disaster programs, a total $125,000 annual limitation applies for payments under the Livestock Indemnity Program, the Livestock Forage Disaster Program, and the Emergency Assistance for Livestock, Honey Bees and Farm-Raised Fish Program. A separate $125,000 annual limitation applies to payments under the Tree Assistance Program.

ACTIVELY ENGAGED IN FARMING: Producers who participate in the Price Loss Coverage or Agriculture Risk Coverage programs are required to provide significant contributions to the farming operation to be considered as "actively engaged in farming." The 2014 Farm Bill required the Secretary to promulgate regulations to define “significant contribution of active personal management” as part of this determination. In December 2015, FSA published regulations to define “significant contribution of active personal management” to ensure that payments are issued only to active managers at farms that operate as joint ventures or general partnerships.

COMPLIANCE: The 2014 Farm Bill continues to require an acreage report for all cropland on the farm. The acreage report is required to be eligible for Price Loss Coverage; Agriculture Risk Coverage; Cotton Transition Assistance Payments for producers of upland cotton; marketing assistance loans; and loan deficiency payments.

Compliance with Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) provisions continues to be required for participation in most FSA and NRCS programs. These provisions place restrictions on the planting of an agricultural commodity on highly erodible land or wetlands. Further, they prohibit the conversion of a wetland to make possible the production of an agricultural commodity.

The 2014 Farm Bill added premium assistance for crop insurance as a benefit subject to compliance with HELC and WC provisions. New provisions are created for determinations, administration, and penalties relating to HELC and WC provisions that are unique to crop insurance. FSA will make HELC/WC eligibility determinations for crop insurance participants based on NRCS technical determinations of HELC/WC compliance.

PRICE LOSS COVERAGE (PLC) AND AGRICULTURE RISK COVERAGE (ARC)

Base Reallocation and Yield Updates: Owners of farms that participate in PLC or ARC programs for the 2014-2018 crops had a one-time opportunity, in 2015, to: (1) maintain the farm’s 2013 bases through 2018; or (2) reallocate base acres (excluding cotton bases). Covered commodities include wheat, oats, barley, corn, grain sorghum, rice, soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe and sesame seed, dry peas, lentils, small chickpeas, and large chickpeas. Upland cotton is no longer considered a covered commodity, but the upland cotton base acres on the farm are renamed “generic” base acres. Producers may receive payments on generic base acres if those acres are planted to a covered commodity.

A producer also had the opportunity to update the counter-cyclical program payment yield for each covered commodity based on 90 percent of the farm’s 2008-2012 average yield per planted acre, excluding any year

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when no acreage was planted to the covered commodity. Program payment yields are used to determine payment amounts for the Price Loss Coverage program.

Price Loss Coverage: Payments are issued when the effective price of a covered commodity is less than the respective reference price for that commodity established in the statute. The payment is equal to 85 percent of the base acres of the covered commodity times the difference between the reference price and the effective price times the program payment yield for the covered commodity.

ARC - County: Payments are issued when the actual county crop revenue of a covered commodity is less than the ARC county guarantee for the covered commodity and are based on county data, not farm data. The ARC county guarantee equals 86 percent of the previous 5-year average national farm price, excluding the years with the highest and lowest price (the ARC guarantee price), times the 5-year average county yield, excluding the years with the highest and lowest yield (the ARC county guarantee yield). Both the guarantee and actual revenue are computed using base acres, not planted acres. The payment is equal to 85 percent of the base acres of the covered commodity times the difference between the county guarantee and the actual county crop revenue for the covered commodity. Payments may not exceed 10 percent of the benchmark county revenue (the ARC guarantee price times the ARC county guarantee yield).

ARC – Individual: Payments are issued when the actual individual crop revenues, summed across all covered commodities on the farm, are less than ARC individual guarantees summed across those covered commodities on the farm. The farm for individual ARC purposes is the sum of the producer’s interest in all ARC farms in the State. The farm’s ARC individual guarantee equals 86 percent of the farm’s individual benchmark guarantee, which is defined as the ARC guarantee price times the 5-year average individual yield, excluding the years with the highest and lowest yields, and summing across all crops on the farm. The actual revenue is computed in a similar fashion, with both the guarantee and actual revenue computed using planted acreage on the farm. The individual ARC payment equals: (a) 65 percent of the sum of the base acres of all covered commodities on the farm, times (b) the difference between the individual guarantee revenue and the actual individual crop revenue across all covered commodities planted on the farm. Payments may not exceed 10 percent of the individual benchmark revenue.

Election Required: All of the producers on a farm must make a one-time, unanimous election of: (1) PLC/County ARC on a covered-commodity-by-covered-commodity basis; or (2) Individual ARC for all covered commodities on the farm. If the producers on the farm elect PLC/County ARC, the producers must also make a one-time election to select which base acres on the farm are enrolled in PLC and which base acres are enrolled in County ARC. Alternatively, if Individual ARC is selected, then every covered commodity on the farm must participate in Individual ARC.

The election between ARC and PLC is made in 2014 and a producer cannot switch to ARC (from PLC), or vice versa, in subsequent years. If an election is not made in 2014, the farm may not participate in either PLC or ARC for the 2014 crop year and the producers on the farm are deemed to have elected PLC for subsequent crop years, but must still enroll their farm to receive coverage. If the sum of the base acres on a farm is ten acres or less, the producer on that farm may not receive PLC or ARC payments, unless the producer is a socially disadvantaged farmer or rancher or is a limited resource farmer or rancher. Payments for PLC and ARC are issued after the end of the respective crop year, but not before October 1.

Producers enrolling in PLC, and who also participate in the Federal crop insurance program, may make the annual choice whether to purchase additional crop insurance coverage called the Supplemental Coverage Option (SCO). SCO provides the producer the option of covering a portion of his or her crop insurance deductible and is based on expected county yields or revenue. The cost of SCO is subsidized and indemnities are determined by the yield or revenue loss for the county or area. SCO is not available to producers who enroll in ARC.

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MARKETING ASSISTANCE LOANS (MALS) AND SUGAR LOANS

The 2014 Farm Bill extends the authority for sugar loans for the 2014 through 2018 crop years and nonrecourse marketing assistance loans (MALs) and loan deficiency payment (LDPs) for the 2014-2018 crops of wheat, corn, grain sorghum, barley, oats, upland cotton, extra-long staple cotton, long grain rice, medium grain rice, soybeans, other oilseeds (including sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe and sesame seed), dry peas, lentils, small chickpeas, large chickpeas, graded and non-graded wool, mohair, honey, unshorn pelts and peanuts. Availability of loans for some commodities may be affected by appropriations language. Provisions are mostly unchanged from the 2008 farm bill, except marketing loan gains and loan deficiency payments are subject to payment limitations.

DAIRY PROGRAMS

The Margin Protection Program for Dairy Producers (MPP-Dairy) replaces Milk Income Loss Contract (MILC) program and is effective through December 31, 2018. The MPP-Dairy offers producers: (1) catastrophic coverage, at no cost to the producer, other than an annual $100 administrative fee; and (2) various levels of buy-up coverage. Catastrophic coverage provides payments to participating producers when the national dairy production margin is less than $4.00 per hundredweight (cwt). The national dairy production margin is the difference between the all-milk price and average feed costs. Producers may purchase buy-up coverage that provides payments when margins are between $4.00 and $8.00 per cwt. To participate in buy-up coverage, a producer must pay a premium that varies with the level of protection the producer elects.

In addition, the 2014 Farm Bill creates the Dairy Product Donation Program. This program is triggered in times of low operating margins for dairy producers, and requires USDA to purchase dairy products for donation to food banks and other feeding programs.

DAIRY INDEMNITY PAYMENT PROGRAM (DIPP)

The program provides payments to dairy producers when a public regulatory agency directs them to remove their raw milk from the commercial market because it has been contaminated by pesticides and other residues.

CONSERVATION RESERVE PROGRAM (CRP)

The 2014 Farm Bill continues CRP with modifications. The acreage cap is gradually lowered to 24 million acres for fiscal years 2017 and 2018. The requirement to reduce rental payments under emergency haying and grazing is eliminated. Rental payment reductions of not less than 25 percent are required for managed haying and grazing.

Producers were given the opportunity for an “early-out” from their CRP contracts, but only in fiscal year 2015. The rental payment portion of the Grassland Reserve Program enrollment has been incorporated into the CRP.

The Transition Incentive Program (TIP) continues to allow for the transition of CRP land to a beginning or socially disadvantaged farmer or rancher so land can be returned to sustainable grazing or crop production. TIP now includes eligibility for military veterans (i.e., “veteran farmers”).

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BIOMASS CROP ASSISTANCE PROGRAM (BCAP)

BCAP provides incentives to farmers, ranchers and forest landowners to establish, cultivate and harvest eligible biomass for heat, power, bio-based products, research and advanced biofuels. Crop producers and bioenergy facilities can team together to submit proposals to USDA for selection as a BCAP project area. BCAP has been extended through 2018 and is authorized at $25 million per fiscal year. In FY 2017 new obligational authority was limited to $3 million by the Consolidated Appropriations Act, 2017.

NONINSURED CROP DISASTER ASSISTANCE PROGRAM (NAP)

NAP has been expanded to include buy-up coverage, similar to buy-up provisions offered under the federal crop insurance program. Producers may elect coverage for each individual crop between 50 and 65 percent, in 5 percent increments, at 100 percent of the average market price. Producers also pay a fixed premium equal to 5.25 percent of the liability. The waiver of service fees has been expanded from just limited resource farmers to also include beginning farmers and socially disadvantaged farmers. The premiums for buy-up coverage are reduced by 50 percent for those same farmers. NAP coverage is expanded to include crops grown expressly for the purpose of producing a feedstock for renewable biofuel, renewable electricity, or biobased products. NAP is also made available to producers that suffered a loss to a 2012 annual fruit crop grown on a bush or tree in a county declared a disaster by the Secretary due to a freeze or frost. Grazing land is not eligible for buy-up coverage.

REIMBURSEMENT TRANSPORTATION COST PAYMENT PROGRAM (RTCP) FOR GEOGRAPHICALLY DISADVANTAGED FARMERS AND RANCHERS

The RTCP was re-authorized and provides assistance to geographically disadvantaged farmers and ranchers for a portion of the transportation cost of certain agricultural commodities or inputs.

DISASTER PROGRAMS

The 2014 farm bill directed the Secretary of Agriculture to use such sums as necessary from the Commodity Credit Corporation to reimburse producers for losses in FY 2012 and each succeeding year as established in the following four programs. The programs were previously funded by the Agricultural Disaster Relief Trust Fund. The programs are made retroactive to Oct. 1, 2011. Producers are no longer required to purchase crop insurance or NAP coverage to be eligible for these programs (the risk management purchase requirement) as mandated by the 2008 Farm Bill.

• Livestock Forage Disaster Program (LFP): provides compensation to eligible livestock producers that have suffered grazing losses due to drought or fire on land that is native or improved pastureland with permanent vegetative cover or that is planted specifically for grazing. LFP payments for drought are equal to 60 percent of the monthly feed cost for up to 5 months, depending upon the severity of the drought. LFP payments for fire on federally managed rangeland are equal to 50 percent of the monthly feed cost for the number of days the producer is prohibited from grazing the managed rangeland, not to exceed 180 calendar days.

• Livestock Indemnity Program (LIP): provides benefits to livestock producers for livestock deaths in excess of normal mortality caused by adverse weather or by attacks by animals reintroduced into the wild by the Federal Government. LIP payments are equal to 75 percent of the average fair market value of the livestock.

• Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish (ELAP): provides emergency assistance to eligible producers of livestock, honeybees and farm-raised fish for losses due to disease (including cattle tick fever), adverse weather, or other conditions, such as blizzards and wildfires, not covered by LFP and LIP. Total payments are capped at $20 million in a fiscal year.

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• Tree Assistance Program (TAP): provides financial assistance to qualifying orchardists and nursery tree growers to replant or rehabilitate eligible trees, bushes, and vines damaged by natural disasters.

FEEDSTOCK FLEXIBILITY PROGRAM (FFP)

Congress reauthorized the FFP in the 2014 Farm Bill through fiscal year 2018, allowing for the purchase of sugar to be sold for the production of bioenergy in order to avoid forfeitures of sugar loan collateral under the Sugar Program.

NON-FARM BILL PROGRAMS

The following programs continue under laws other than the 2014 Farm Bill.

Emergency Conservation Program (ECP)

ECP is authorized by Title IV of the Agricultural Credit Act of 1978, Section 401 (P.L. 95-334) (16 U.S.C. 2201). ECP provides emergency cost-share assistance to farmers and ranchers to help rehabilitate farmland and ranchland damaged by natural disasters and to carry out water conservation measures during periods of severe drought. Cost-share assistance may be offered only for emergency conservation practices to restore land to a condition similar to that existing prior to the natural disaster.

Emergency Forest Restoration Program (EFRP)

EFRP is authorized by Title IV of the Agricultural Credit Act of 1978, Section 407 (16 U.S.C. 2206). EFRP was established to provide financial and technical assistance to owners of non-industrial private forest land damaged by natural disaster to carry out emergency measures to restore damaged forests and rehabilitate forest resources.

Farm Storage Facility Loan Program (FSFL)

FSFL provides low-interest financing for producers to build or upgrade farm storage and handling facilities.

Sugar Storage Facility Loan Program (SSFL)

SSFL provides low-interest financing for processors to build or upgrade farm storage and handling facilities for raw or refined sugar.

Commercial Warehouse Activities

In FY 2018 the functions of the United States Warehouse Act (USWA), first enacted in 1916 and reauthorized by the Grain Standards and Warehouse Improvement Act of 2000, P.L. 106-472, were transferred to the USDA Agricultural Marketing Service (AMS).

AGENCY STRUCTURE

FSA delivers its programs through more than 2,100 USDA Service Centers, 50 State offices, and an area office in Puerto Rico. FSA has headquarters offices in Washington, DC, two field offices in Kansas City, an office in Salt Lake City, and a field office in St. Louis servicing farm loan programs. Personnel at the Washington headquarters office are responsible for program policy decisions, program design, and program oversight. Personnel at the Washington headquarters office and the Kansas City, Missouri complex are responsible for financial management, IT support for program delivery, and commodity operations. FSA is part of the newly organized Farm Production and Conservation (FPAC) mission area which includes the Natural Resources Conservation Service and Risk Management Agency.

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FSA’s permanent, full-time, end-of-year Federal employment as of September 30, 2017, was 3,954. FSA non-Federal permanent employment in USDA Service Centers was 6,962. The total number of Federal and non-Federal permanent full time positions in the Washington, DC headquarters office was 1,130 and the total number in the field offices was 9,786.

OIG Reports – Completed 06401-0008-11 11/09/17 50601-0003-22 01/27/17 NRCS

CCC’s Balance Sheet for Fiscal Year 2017 Coordination of USDA Farm Program Compliance – FSA, RMA and

OIG Reports – In Progress 03601-0002-31 03601-0002-41

50024-0003-22

Agriculture Risk Coverage and Price Loss Coverage Programs FSA Commodity Purchases for International Food Assistance Programs Adjusted Gross Income Compliance Verification Process

GAO Reports – Completed

GAO Reports – In Progress 102339 Federal Economic Adjustment Assistance Programs

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FARM SERVICE AGENCY Available Funds and Staff Years

(Dollars in thousands)

2016 Actual 2017 Actual 2018 Estimate 2019 Estimate Item

Amount SYs Amount SYs Amount SYs Amount SYs

Salaries and Expenses: Discretionary Appropriations................................................ $1,200,180 9,161 $1,206,110 9,123 $1,179,741 9,040 $920,490 7,080 Mandatory Appropriations.................................................... Supplemental Appropriations...............................................

ACIF Program Account: FSA S&E and FPAC Business Center Transfer…........…… 306,998 2,174 306,998 2,182 304,913 2,214 282,517 2,098

Subsidy……………………………………………………… 69,575 - 89,962 - 89,351 - 77,347 - Individual Development Grants……………………….. Admin. Expenses Non-Recoverable Loan Costs (PLCE)…… State Mediation Grants………………………………………… Grassroots Source Water Protection Program………………… Reforestation Pilot Program.................................................. Geog. Disadvantaged Farmers and Ranchers....................... Emergency Conservation Program........................................

-7,9203,4046,5006001,99617,000

-------

-10,0703,9046,5006001,996

131,629

- -10,002 3,877 6,456 596 1,982 28,651

-------

-10,0703,228 ----

-------

Emergency Conservation Program (Stafford)....................... 91,000 - - - - - - -Subtotal Appropriations........................................................ 1,705,173 11,335 1,757,769 11,305 1,625,569 11,254 1,293,652 9,178

Transfers In:............................................................................... - - - - - - - -Credit Reform Transfers: CCC Export Loans Program Account.............................. 354 3 2,463 23 2,446 23 335 3 P.L. 480 Program Account............................................... 2,528 21 149 1 148 1 142 1

Margin Protection Program Fees………………………….. - - 1,323 - 1,000 - - -Congresssional Relations...................................................... 135 - 150 - - - - -

Transfers Out.............................................................................. -4,782 - - - - - - -Adjusted Appropriation......................................................... 1,703,408 11,359 1,761,854 11,329 1,629,163 11,278 1,294,129 9,182

Balance Available, SOY S&E .................................................. 33,647 - 17,322 - 37,000 - - -Balance Available, SOY Emergency Forest Restoration ......... - - - - - - - -Other Adjustments (Margin Protection Program)..................... - - - - - - - -Total Available...................................................................... 1,737,055 11,359 1,779,176 11,329 1,666,163 11,278 1,294,129 9,182

Lapsing Balances....................................................................... -2,988 - -13,584 - - - - -Balance Available, EOY (S&E)................................................ -19,282 - -37,000 - - - - -Balance Available, EOY (Emergency Forest Restoration)....... - - - - - - - -Obligations............................................................................ 1,714,785 11,359 1,728,592 11,329 1,666,163 11,278 1,294,129 9,182

Obligations under other USDA appropriations: Foreign Agricultural Service……………………...…………… 4,714 22 4,893 15 4,413 12 - - Risk Management Agency…………………………..………… 2,501 15 2,585 11 2,800 10 - - Food & Nutrition Service…………………………..………… - - - - - - - - Agricultural Marketing Service…………………….………… 1,024 8 910 6 603 2 - - Natural Resources Conservation Service……………………. 1,028 6 1,879 2 1,321 2 - - Flying Contracts…………………..………………...………… 10,392 - 10,661 - 14,266 - - - Farm Bill……………………………….……….…………… 4,323 - 1,177 - - - - - CCC to Administer P.L. 480 Title II Grants………….……… 7,089 48 5,779 26 - - - - Miscellaneous…………………………………….…………… 26,251 6 16,306 8 4,148 5 - -Total, Other USDA................................................................ 57,322 105 44,190 68 27,551 31 - -

Total, Agriculture Appropriations............................................. 1,772,107 11,464 1,772,782 11,397 1,693,714 11,309 1,294,129 9,182

Other Federal Funds: Sale of Aerial Photographs………………………................... 605 6 757 2 945 3 - - Warehouse Examinations…………………………................. 3,297 29 3,500 21 - - - -Total, Other Federal............................................................... 3,902 35 4,257 23 945 3 - -

Non-Federal Funds Loan Service Fee Financing……………………….................. 1,858 33 1,239 33 1,239 33 1,239 33 Producer Measurement Service……………………............... 938 13 1,554 13 1,554 13 1,554 13 Farm Bill……………………………….………..................... 27,943 644 1,999 51 - - - - Miscellaneous…………………………………….…………… 1,822 2 1,712 2 1,992 2 1,970 2 Total, Non-Federal................................................................. 32,561 692 6,504 99 4,785 48 4,763 48

Total, FSA……………………………………......................... 1,808,570 12,191 1,783,543 11,519 1,699,444 11,360 1,298,892 9,230

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FARM SERVICE AGENCY

Permanent Positions by Grade and Staff Year Summary 2016 and 2017 Actuals and Estimated 2018 and 2019

Item

Senior Executive Service…

2016 Actual 2017 Actual 2018 Estimates 2019 President's Budget

Wash DC Field Total

Wash DC Field Total

Wash DC Field Total

Wash DC Field Total

14 0 14 12 0 12 12 0 12 12 0 12 Senior Level……………… 0 0 0 0 0 0 0 0 0 0 0 0

GS 15……………………… 59 47 106 64 0 64 59 47 106 59 47 106 GS 14……………………… 146 6 152 151 1 152 146 6 152 146 6 152 GS 13……………………… 410 368 778 399 356 755 379 350 729 379 350 729 GS 12……………………… 306 907 1,213 271 877 1,148 306 780 1,086 306 780 1,086 GS 11……………………… 103 465 568 92 505 597 103 465 568 103 465 568 GS 10……………………… 0 0 0 0 0 0 0 0 0 0 0 0 GS 9……………………… 62 317 379 61 342 403 66 238 304 66 238 304 GS 8……………………… 22 36 58 19 41 60 25 23 48 25 23 48 GS 7……………………… 46 664 710 48 603 651 46 664 710 46 664 710 GS 6……………………… 7 70 77 7 64 71 7 70 77 7 70 77 GS 5……………………… 8 87 95 6 43 49 8 87 95 8 87 95 GS 4……………………… 12 0 12 0 3 3 12 0 12 12 0 12 GS 3……………………… 0 0 0 0 0 0 0 0 0 0 0 0 GS 2……………………… 0 0 0 0 0 0 0 0 0 0 0 0

Other Graded Positions....... 3 0 3 2 209 211 8 1 9 8 1 9

Total Permanent Positions.

Total, Permanent Full-Time Employment, end-of-year.....................

Total Staff-Year Estimate

1,198 2,967 4,165 1,132 3,044 4,176 1,177 2,731 3,908 1,177 2,731 3,908

1,164 2,968 4,132 1,130 2,837 3,967 1,017 2,955 3,972 276 2,526 2,802

1,147 2,951 4,098 1,157 2,961 4,118 1,017 2,955 3,972 276 2,526 2,802

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FARM SERVICE AGENCY Size, Composition, and Cost of Motor Vehicle Fleet

1/ The passenger motor vehicles are used by County office employees -County Executive Directors, Program Technicians, Farm Loan Managers, Farm Loan Officers, Real Estate Appraisers and Farm Loan Program Technicians as well as State Office Level Employees – State Executive Directors, Program Chiefs and Program Specialists, County Office Reviewers (COR), Administrative Officers/Executive Officers and Administrative Specialists. FSA County office employees use vehicles to meet with farmers and ranchers on-site at their operations to perform a variety of functions to deliver Farm Programs and Farm Loan Programs (FLP) services. County office employees of FSA conduct on-site program compliance and crop inspections; real estate appraisals and inspections; and chattel appraisals and inspections. FLP employees will meet on-site with farmers and ranchers to develop projected and actual cash flows as part of the loan making and loan servicing processes. County office FSA employees use vehicles to attend outreach functions, other public meetings, attend training and travel between county offices while on detail or performing duties in shared management office situations. State office level employees use vehicles to attend outreach functions, public meetings, attend and perform training. They also travel to the county office to meet with County office employees, perform administrative functions and program reviews.

2/ Changes to the motor vehicle fleet.

For FY 2018, there is a planned disposal of one Sedan/Wagon for a net loss of one vehicle. No planned disposals from FY 2018 to FY 2019.

3/ Replacement of passenger motor vehicles. There is no proposed replacement of motor vehicles for FY 2018 or FY 2019.

4/ Impediments to managing the motor vehicle fleet.vehicle fleet in the most cost-effective manner.

There are no identified impediments to managing the motor

5/

Fiscal Year

Number of Vehicles by Type *

Annual Operating Costs

($ in 000) **

Sedans and Station Wagons

Light Trucks, SUVs, and Vans

Medium Duty Vehicles

Ambu-lances Buses

Heavy Duty Vehicles

Total Number of

Vehicles

4X2 4X4 2016 Actuals 347 284 85 0 0 0 2 718 $3,669 Change 0 0 0 0 0 0 0 +0 530 2017Actuals 347 284 85 0 0 0 2 718 $4,199 Change -1 0 0 0 0 0 0 -1 +62

2018 Estimate 346 284 85 0 0 0 2 717 $4,261 Change 0 0 0 0 0 0 0 0 0

2019 Estimate 346 284 85 0 0 0 2 717 $4,261 * Numbers include vehicles owned by the agency and leased from commercial sources or GSA. ** Excludes acquisition costs and gains from sale of vehicles as shown in FAST.

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FARM SERVICE AGENCY Shared Funding Projects (Dollars in thousands)

2019 2017 2018 President's

2016 Actual Actual Estimate Budget

Working Capital Fund: Administration: HR Enterprise System Management........................................ 154 154 241 350 Integrated Procurement System............................................... 297 298 474 477 Mail and Reproduction Management...................................... 1,260 670 724 729 Material Management Service Center..................................... 217 273 271 276 Procurement Operations Division........................................... 179 67 78 104 Subtotal............................................................................... 2,107 1,462 1,788 1,936

Communications: Creative Media & Broadcast Center........................................ 297 754 487 342

Finance and Management: National Finance Center.......................................................... 5,115 4,886 9,403 9,474 Financial Management Services.............................................. 14,574 7,142 6,354 6,546 Internal Control Support Services........................................... 549 644 628 629 Subtotal............................................................................... 20,238 12,672 16,385 16,649

Information Technology: National Information Technology Center................................ 25,826 23,093 21,519 21,519 Client Technology Service...................................................... 85,681 91,487 81,310 87,724 Subtotal............................................................................... 111,507 114,580 102,829 109,243

Correspondence Management..................................................... 393 382 343 370

Total, Working Capital Fund............................................... 134,542 129,850 121,832 128,540

Departmental Shared Cost Programs: 1890's USDA Initiatives.............................................................. 389 442 389 389 Advisory Committee Liaison Services........................................ - 6 7 7 Classified National Liaison Services........................................... 63 64 128 128 Continuity of Operations Planning.............................................. 246 243 219 219 Emergency Operations Center..................................................... 288 280 242 242 Facility and Infrastructure Review and Assessment.................... 53 54 47 47 Faith-Based Initiatives and Neighborhood Partnerships.............. 47 48 41 41 Hispanic-Serving Institutions National Program......................... 216 233 205 205 Honor Awards............................................................................. 9 - 8 8 Human Resources Transformation.............................................. 189 200 182 182 Identity & Access Management (HSPD-12)................................ 831 801 697 697 Intertribal Technical Assistance Network.................................... 377 359 319 319 Medical Services......................................................................... 97 82 96 96 People's Garden........................................................................... 79 77 68 68 Personnel Security Branch (formerly PDSD).............................. 175 213 163 163 Preauthorizing Funding............................................................... 458 434 384 384 Retirement Processor/Web Application....................................... 71 70 62 62 TARGET Center.......................................................................... 177 175 150 150 USDA 1994 Program.................................................................. 85 95 81 81 Virtual University........................................................................ 244 240 206 206

Total, Departmental Shared Cost Programs....................... 4,094 4,116 3,694 3,694

E-Gov: Budget Formulation and Execution Line of Business................. 11 11 12 12 Enterprise Human Resources Intergation.................................... 241 241 224 224 E-Training................................................................................... 398 - - -Financial Management Line of Business..................................... 17 12 12 12 Human Resources Management Line of Business....................... 34 33 33 33 Integrated Acquisition Environment............................................ 468 937 956 1,032 Integrated Acquisition Environment - Loans and Grants............ - - - -Disaster Assistance Improvement Plan........................................ 43 42 42 42 E-Rulemaking............................................................................. 36 2 2 2 Geospatial Line of Business........................................................ 23 13 13 13 GovBenefits.gov.......................................................................... 127 98 100 101 Grants.gov................................................................................... - - 1 -FOIA............................................................................................ 2

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FARM SERVICE AGENCY Shared Funding Projects (Dollars in thousands)

2019 2017 2018 President's

2016 Actual Actual Estimate Budget

Total, E-Gov.......................................................................... 1,398 1,389 1,395 1,473 Agency Total...................................................................... 140,034 135,355 126,921 133,707

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FARM SERVICE AGENCY

The estimates include appropriation language for this item as follows (new language underscored: deleted matter enclosed in brackets):

Salaries and Expenses (Including Transfers of Funds):

For necessary expenses of the Farm Service Agency, [$1,179,741,000 ]$920,490,000 Provided, [That not more than 50 percent of the $100,851,000 made available under this heading for information technology related to farm program delivery, including the Modernize and Innovate the Delivery of Agricultural Systems (MIDAS) and other farm program delivery systems, may be obligated until the Secretary submits to the Committees on Appropriations of both Houses of Congress a plan for expenditure that (1) identifies for each project/investment over $25,000 (a) the functional and performance capabilities to be delivered and the mission benefits to be realized, (b) the estimated lifecycle cost, including estimates for development as well as maintenance and operations, and (c) key milestones to be met; (2) demonstrates that each project/investment is, (a) consistent with the Farm Service Agency Information Technology Roadmap, (b) being managed in accordance with applicable lifecycle management policies and guidance, and (c) subject to the applicable Department's capital planning and investment control requirements; and (3) has been reviewed by the Government Accountability Office and approved by the Committees on Appropriations of both Houses of Congress: Provided further, That the agency shall submit a report by the end of the fourth quarter of fiscal year 2016 to the Committees on Appropriations and the Government Accountability Office, that identifies for each project/investment that is operational (a) current performance against key indicators of customer satisfaction, (b) current performance of service level agreements or other technical metrics, (c) current performance against a pre-established cost baseline, (d) a detailed breakdown of current and planned spending on operational enhancements or upgrades, and (e) an assessment of whether the investment continues to meet business needs as intended as well as alternatives to the investment: Provided further,] That the Secretary is authorized to use the services, facilities, and authorities (but not the funds) of the Commodity Credit Corporation to make program payments for all programs administered by the Agency: Provided further, That other funds made available to the Agency for authorized activities may be advanced to and merged with this account: Provided further, That funds made available to county committees shall remain available until expended [: Provided further, That none of the funds available to the Farm Service Agency shall be used to close Farm Service Agency county offices: Provided further, That none of the funds available to the Farm Service Agency shall be used to permanently relocate county based employees that would result in an office with two or fewer employees without prior notification and approval of the Committees on Appropriations of both Houses of Congress].

The first change proposes deletion of the language included in the 2017 Enacted, specifying the funding levels for MIDAS and farm program delivery as well as the request for a project/investment expenditure plan.

The second change proposes deletion of the language included in the 2017 Enacted, prohibiting office closures and limiting employee relocations. These restrictions limit FSA’s ability to respond to changing customer needs and program delivery methods.

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FARM SERVICE AGENCY

Lead-Off Tabular Statement

Salaries and Expenses

Budget Estimate, 2019............................................................................................................ 2018 Annualized Continuing Resolution................................................................................. Change in Appropriation.........................................................................................................

$1,187,403,000 1,505,428,000 -318,025,000

Adjustment in 2018:.....…...….…………………...………………… 2018 Annualized CR.....……………………………………………… Activities Transferred to AMS a/.....…………………………………

$1,505,428,00018,180,000

Adjusted Base for 2018.......………..…………..…………………………………………. 2018 Annualized CR…...........……………………….……………………………………. Change in Appropriation

$1,487,248,0001,187,403,000 -299,845,000

a/ In FY 2018, FSA will transfer the international commodity procurement and warehouse functions to the Agricultural Marketing Service (AMS) totaling $18.180 million and 139 (82 direct and 57 reimbursable) Staff years

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FARM SERVICE AGENCY

Project Statement Adjusted Appropriations Detail and Staff Years (SYs)

(Dollars in thousands)

2016 Actual 2017 Actual 2018 Estimates 2019 Estimate

Program

Amount SYs Amount SYs Amount SYs Amount SYs

Discretionary Appropriations:

Total Appropriations……………….... $1,510,060 11,359 $1,515,720 11,329 $1,487,249 11,278 $1,187,403 9,182

Rescissions and Transfers:........................... Program Transfers…………………….... -4,782 - - - - - - -Farm Loan Programs............................ -306,998 -2,174 -306,998 -2,182 -304,913 -2,214 -266,436 -2,098 Other Credit Programs -2,882 -24 -2,612 -24 -2,594 -24 -477 -4 Total Program Transfers -314,662 -2,198 -309,610 -2,206 -307,508 -2,238 -266,913 -2,102

Total Appropriation………………….. 1,195,398 9,161 1,206,110 9,123 1,179,741 9,040 920,490 7,080

Transfers In:................................................. Cong. Relations……………………….... 135 - 150 - - - - -Margin Protection Program Fees……...... - - 1,323 - 1,000 - - -Credit Reform Transfers………………… 309,880 2,198 309,610 2,206 307,508 2,238 266,913 2,102 Subtotal………………………………… 310,015 2,198 311,083 2,206 308,508 2,238 266,913 2,102

Transfers Out:............................................... - - - - - - - -Rescission…………………………............. - - - - - - - -Sequestration……………………................ - - - - - - - -Bal. Available, SOY……………………….. 33,647 - 17,322 - 37,000 - - -Balance Available, ....................................... - - - - - - - - SOY (Emergency Forest Resortation)..... - - - - - - - -Recoveries, Other (Net)…………………… - - - - - - - -

Total Available………………………… 1,539,060 11,359 1,534,515 11,329 1,525,249 11,278 1,187,403 9,182

Lapsing Balances………………………...... -2,988 - -13,584 - - - - -Bal. Available, EOY…………………......... -19,282 - -37,000 - - - - -Balance Availablle........................................ - - - - - - - -EOY (Emergency Forest Resortation)..... - - - - - - - -Total Obligations……………………… 1,516,790 11,359 1,483,931 11,329 1,525,249 11,278 1,187,403 9,182

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FARM SERVICE AGENCY

Project Statement Obligations Detail and Staff Years (SYs)

(Dollars in thousands)

2016 Actual 2017 Actual 2018 Estimate Inc. or Dec. 2019 President's Budget Program

Amount SYs Amount SYs Amount SYs Amount SYs Amount SYs Discretionary Obligations: Direct Obligations………...................... $1,206,910 9,161 $1,174,321 9,123 $1,217,741 9,040 -$297,251 -1,960 $920,490 7,080

Farm Loan Program……….................... 306,998 2,174 306,998 2,182 304,913 2,214 -38,477 -116 266,436 2,098 Other Credit Programs........................... 2,882 24 2,612 24 2,594 24 -2,117 -20 477 4 Total Transfer Obligations................. 309,880 2,198 309,610 2,206 307,508 2,238 -40,595 -136 266,913 2,102

Total Obligations........................................ 1,516,790 11,359 1,483,931 11,329 1,525,249 11,278 -337,846 -2,096 1,187,403 9,182

Lapsing Balances........................................ 2,988 - 13,584 - - - - - - -Bal. Available, EOY................................... 19,282 - 37,000 - - - - - - -

Total Available....................................... 1,539,060 11,359 1,534,515 11,329 1,525,249 11,278 -337,846 -2,096 1,187,403 9,182

Transfers In................................................. -309,880 -2,198 -309,610 -2,206 -307,508 -2,238 +40,595 +136 -266,913 -2,102 Cong. Relations………………………... -135 - -150 - - - - - - -Margin Protection Program Fees………… - - -1,323 - -1,000 - - - - -

Transfers Out.............................................. - - - - - - - - - -Rescission................................................... - - - - - - - - - -Sequestration............................................... Bal. Available, SOY.................................... -33,647 - -17,322 - -37,000 - +37,000 - - -Bal. Available, ........................................... - - - - - - - - - - SOY(Emergency Forest Restoration)..... - - - - - - - - - -Other Adjustments (Net)............................. - - - - - - - - - -Total Appropriation................................ 1,195,398 9,161 1,206,110 9,123 1,179,741 9,040 -260,251 - -1,960 920,490 7,080

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Justification of Increases and Decreases

A net decrease of $299,846,000 and 2,096 staff years for Farm Service Agency Salaries and Expenses ($1,487,249,000 and 11,278 direct staff years available in FY 2018)

The Budget proposes $1.2 billion to support Federal and non-Federal staffing. FSA organizational changes, part of the USDA reorganization announced by Secretary Perdue, are reflected in the 2019 Budget, including the transfer of staff and funding to the Farm Production and Conservation (FPAC) Business Center and the Agricultural Marketing Service (AMS).

The FPAC Business Center will consolidate administrative and IT functions of the Farm Service Agency, Natural Resources and Conservation Service, and the Risk Management Agency. More specifically, FPAC Business Center will be responsible for financial management, budgeting, human resources, information technology, acquisitions/procurement, customer experience, internal controls, risk management, strategic and annual planning, and other mission-wide activities. A total of $131,458,000 will be transferred from FSA to the newly formed FPAC Business Center, of which $115,377,000 is from FSA’s Salaries and Expenses account and $16,081,000 is from the Agricultural Credit Insurance Fund (ACIF). FSA will also realign a total of 832 staff years which consist of 650 from headquarters and 182 from state offices.

Savings will be achieved through a number of streamlining efforts that will reduce the cost of program delivery, while maintaining customer service. Streamlining efforts include headquarter and field organizational realignment and strategic reductions in staff years throughout FSA. In addition, reductions in operating expenses and information technology investments will be made. Finally, increased funding will be provided to expand customer self-service for conservation, farm loans and farm programs through a common web portal. This portal, jointly managed by FSA and NRCS, would serve as a launch point for farmers and ranchers to apply for programs and access customer information across the mission area.

1) A net decrease of $211,807,000 and 1,136 Staff Years for Federal Offices ($821,077,000 and 3,938 staff years available in 2018)

a. A decrease of $139,327,000 and 1,136 Staff Years for salaries and benefits ($436,156,000 and 3,938 staff years available in 2018)

1. A decrease of $32,572,000 and 340 Staff Years for salaries and benefits

FSA will continue streamlining efforts and realigning of personnel to further reduce federal staffing in FY 2019 by 340 staff years between headquarters and state offices. FSA will continue streamlining efforts and/or realignment of personnel to accomplish mission critical functions to support program delivery to farmers and ranchers.

2. A decrease of $106,755,000 and 796 Staff Years for salaries and benefits

Under the newly organized Farm Production and Conservation (FPAC) mission area, all mission support functions for FSA, NRCS and RMA are being aligned to the new FPAC Business Center. FSA will realign a total of 832 (796 direct and 36 reimbursable) staff years which consist of 650 from headquarters and 182 from state offices.

b. A decrease of $26,671,000 in operating expenses

1. A decrease of $13,656,000 in operating expenses

FSA will transfer $13,656,000 to the FPAC business center in FY 2019 for operating costs required to support the 796 staff years.

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2. A decrease of $13,015,000 in operating expenses

Federal operations cover everything from headquarters oversight to field office farm loan program activity. Although FSA’s loan portfolio continues to grow and mandatory programs are not diminishing, FSA is working to further reduce operating costs. Reductions in FSA staffing in FY 2019 will result in savings in operating expenses. FSA will continue to look at potential cost saving measures through more efficient use of travel, contract services and postage.

c. A decrease of $7,285,000 in rent

FSA will transfer $7,285,000 to the FPAC business center in FY 2019 for GSA rental space associated with the 796 staff years to be transferred to the FPAC Business Center.

d. A decrease of $38,524,000 for Information Technology ($306,468,000 available in 2018).

The funding change is requested for the following items:

1. An increase of $5,000,000 for FPAC Information Portal

The FPAC mission area is working to deliver significant enhancements to overall USDA customer experience. The FPAC Information Portal will provide USDA customers with ready access to information, educational materials, technical support and programs opportunities by way of the Information Portal. Customers will be offered the opportunity to engage directly with USDA to transact business online. They will benefit from a modern and streamlined transactional portal allowing access to multiple USDA programs currently offered across multiple agency-specific websites, all in one place.

FSA recognizes the importance of technology in delivering its programs, and will continue to focus IT investments to ensure that we have the tools required to provide improved customer service. Within the overall IT investment, FSA will focus on the customer portal.

Working under the guidance of the FPAC Mission Area’s Customer Experience group and in concert with NRCS and RMA, FSA will focus on customer experience strategies that address the desires and expectations of all three agencies. This will include key performance indicators, documenting and measuring the quality of customer experience delivery and dashboard display. Development will be completed in two phases:

Phase 1 of the FPAC portal includes strengthening and enhancing functionality on a shared customer-facing web portal project including web application to initiate NRCS and FSA programs and a user-authenticated environment.

Phase 2 of the FPAC portal includes the connection of a common customer database to the customer-facing web portal.

IT architects from FSA and NRCS are engaged with business owners in a review of the processes, systems and data to identify opportunities for alignment and reduced duplication. As an example, FSA and NRCS can move to a common geospatial database to increase data availability, improve efficiency, and increase the consistency and reliability of disaster recovery services.

2. A decrease of $11,929,000 for operations and maintenance of IT systems

To more effectively plan and manage information technology operations and maintenance costs, FSA increased visibility into efforts to continually improve IT solutions to support current and updated business needs in response to legislative, regulatory, policy, and business functional changes. Updates to FSA’s process for identifying, authorizing and managing information technology work decreases operations and maintenance costs and allows funds to be directed to

24-21

strategic modernization efforts and thoughtful, targeted enhancements supporting continuous program enablement.

In addition, FSA improved oversight of its inventory of hardware and software equipment supporting operations in headquarters, state and county offices. FSA is able to reduce excess equipment from the inventory which decreases future costs. FSA also is updating its equipment management policies to align use of government equipment to the requirements of job functions which will further eliminate unnecessary costs

3. A decrease of $27,833,000 Farm Program Modernization

FSA realized operational efficiencies in MIDAS, including consolidation of operational support expenditures such as program management, operations, hosting costs and data management, and a reduction of contract administration fees. FSA strategically halted new development in FY 2015 to allow a third-party analysis to determine if the current enterprise solution provides the necessary functionality and is the most cost effective modernization solution. Based on the third-party analysis, an alternatives analysis was completed in FY 2017. The future direction of the MIDAS investment will be determined based on the alternatives analysis.

4. A decrease of $3,762,000 of IT related costs from Working Capital Fund

FSA will transfer funding to the FPAC Business Center in FY 2019 for IT related cost for Working Capital Fund associated with the 796 staff years transferred to the FPAC Business Center.

2) A net decrease of $88,039,000 and 960 staff years for Non - Federal Offices ($666,172,000 and 7,340 staff years available in FY 2018)

a. A decrease of $79,639,000 in salaries and benefits and 960 Staff Years

To ensure adequate workforce distribution and alignment of personnel in high priority positions, FSA will continue streamlining efforts or realignment of personnel to still continue to accomplish mission critical functions to support program delivery to farmers and ranchers.

b. A decrease of $8,400,000 in operating expenses

FSA reduced operating cost due to reduction in full time staff years. FSA will be able to maintain current levels of service in administering mandatory programs. Current reduction will allow travel requirements necessary to ensure the safety and security of federal programs, as well as providing postage services required to send out newsletters to farmers and ranchers. Supplies and equipment levels will be sufficient to continue providing adequate levels essential to conduct program administration.

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FARM SERVICE AGENCY Geographic Breakdown of Obligations and Staff Years

(Dollars in thousands and Staff years (SY's))

2016 Actual 2017 Actual 2018 Estimate 2019 President's Budget

State/Territory Staff Staff Staff

Amount Years Amount Years Amount Years Amount Staff Years

Alabama……………… $17,247 191 $18,448 189 $16,935 189 $14,902 164 Alaska………………… 1,074 9 963 8 1,055 8 928 8 Arizona………………… 4,280 46 4,319 44 4,203 44 3,698 40 Arkansas……………… 20,994 250 22,634 251 20,615 251 18,801 216 California……………… 14,491 165 14,734 151 14,229 151 12,520 141 Caribbean……………… 4,181 37 4,398 36 4,105 36 3,612 34 Colorado……………… 12,743 140 13,895 143 12,513 143 11,241 121 Connecticut…………… 1,511 18 1,834 19 1,484 19 1,306 16 Delaware……………… 1,719 17 1,639 17 1,688 18 1,485 15 District of Columbia…… 615,139 1,026 524,047 1,066 639,881 983 407,471 276 Florida………………… 9,934 110 11,027 105 9,755 106 8,583 95 Georgia………………… 25,372 315 26,954 300 24,914 301 21,922 272 Hawaii………………… 3,117 30 3,246 31 3,061 32 2,693 26 Idaho…………………… 11,859 131 12,694 130 11,645 131 10,246 113 Illinois………………… 43,204 516 46,216 519 42,424 520 37,329 445 Indiana………………… 29,554 368 31,724 345 29,020 342 25,535 317 Iowa…………………… 48,969 652 53,493 607 48,084 608 42,310 561 Kansas………………… 41,310 512 44,296 481 40,564 482 35,692 440 Kentucky……………… 29,128 347 30,514 330 28,602 331 25,167 300 Louisiana……………… 16,735 189 17,716 181 16,433 182 14,459 163 Maine………………… 5,401 54 5,465 53 5,303 54 4,667 46 Maryland……………… 6,375 65 6,555 68 6,260 69 5,508 56 Massachusetts………… 3,203 34 3,271 33 3,145 34 2,767 29 Michigan……………… 21,188 245 22,699 247 20,805 248 18,307 211 Minnesota……………… 36,558 382 39,321 435 35,898 436 31,587 329 Mississippi…………… 22,099 224 23,634 245 21,700 246 19,094 193 Missouri……………… 37,200 390 38,893 424 36,528 425 32,141 336 Montana……………… 19,613 203 20,907 216 19,259 217 16,946 174 Nebraska……………… 36,379 400 38,838 423 35,722 424 31,432 345 Nevada………………… 2,212 22 2,483 22 2,172 23 1,911 19 New Hampshire………… 2,018 20 2,086 19 1,982 20 1,744 18 New Jersey…………… 3,488 31 3,809 35 3,425 36 3,014 26 New Mexico…………… 6,718 73 7,075 70 6,597 69 5,804 63 New York……………… 15,876 176 16,839 177 15,589 177 13,717 152 North Carolina………… 28,786 337 29,997 332 28,266 332 24,871 290 North Dakota…………… 27,170 324 28,615 304 26,679 304 23,475 279 Ohio…………………… 27,314 304 28,728 317 26,821 318 23,600 262 Oklahoma……………… 28,344 329 28,884 319 27,832 319 24,490 283 Oregon………………… 9,611 91 9,925 99 9,437 99 8,304 78 Pennsylvania…………… 16,413 190 17,180 187 16,117 187 14,181 164 Rhode Island…………… 957 9 1,027 8 940 9 827 8 South Carolina………… 12,584 140 13,307 143 12,357 144 10,873 121 South Dakota…………… 29,294 344 31,047 329 28,765 330 25,310 297 Tennessee……………… 23,186 258 25,329 265 22,767 266 20,033 222 Texas…………………… 60,330 724 66,359 689 59,240 690 52,126 623 Utah…………………… 7,379 72 7,798 78 7,246 79 6,376 62 Vermont……………… 4,566 44 4,763 43 4,484 45 3,945 38 Virginia………………… 16,955 189 17,955 182 16,649 183 14,649 163 Washington…………… 10,331 116 10,839 114 10,144 115 8,926 100 West Virginia………… 8,576 88 9,006 86 8,421 87 7,410 75 Wisconsin……………… 27,756 344 29,659 343 27,255 344 23,982 296 Wyoming……………… 6,349 68 6,847 71 6,234 72 5,486 59 Obligations………… 1,516,790 11,359 1,483,931 11,329 1,525,249 11,278 1,187,403 9,182

Lapsing Balances……… 2,988 13,584 Bal. Available, EOY …… 19,282 37,000 Total, Avail or Est……. 1,539,060 11,359 1,534,515 11,329 1,525,249 11,278 1,187,403 9,182

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FARM SERVICE AGENCY Classification by Objects (Dollars in thousands)

2019 2016 2017 2018 President's Actual Actual Estimates Budget

Personnel Compensation: Washington D.C................................................................... $100,896 $104,100 $102,767 $85,224 Field..................................................................................... 214,793 207,620 212,649 137,878

11 Total personnel compensation.................................. 315,689 311,720 315,416 223,102 12 Personal benefits……………………………….. 111,331 119,645 120,740 73,726 13.0 Benefits for former personnel................................... 398 0 0 0

Total, personnel comp. and benefits...................... 427,418 431,365 436,156 296,829

Other Objects: 21.0 Travel and transportation of persons........................ 12,149 8,021 9,370 3,318 22.0 Transportation of things............................................ 1,832 1,898 2,010 1,392 23.1 Rental payments to GSA........................................... 24,831 26,198 25,525 18,204 23.2 Rental payments to others......................................... 3,505 3,659 3,659 3,695 23.3 Communications, utilities, and misc. charges........... 44 159 159 159 23.3 Postage...................................................................... 5,786 3,383 6,153 146 24.0 Printing and reproduction......................................... 1,090 540 1,222 -25 Other contractual services......................................... 367,867 336,275 351,449 282,978 25.3 Other purchases of goods and services

from Federal sources (DHS).................................. 3,352 3,413 3,186 2,006 26.0 Supplies and materials.............................................. 1,160 1,122 1,230 328 31.0 Equipment................................................................ 797 1,645 958 215 41.0 Grants....................................................................... 666,959 666,253 684,172 578,132 42.0 Insurance claims and indemnities……………......... 0 0 0 0 43.0 Interest and dividends…………………………....... 0 0 0 0

Total, Other Objects............................................. 1,089,372 1,052,566 1,089,093 890,573

99.9 Total, new obligations.......................................... 1,516,790 1,483,931 1,525,249 1,187,403

Position Data: Average Salary (dollars), ES Position.................................. $173,214 $173,222 $175,690 $175,690 Average Salary (dollars), GS Position.................................. $77,535 $76,795 $77,889 $77,889 Average Grade, GS Position................................................ 11.0 11.0 11.0 11.0

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SALARIES AND EXPENSES

Status of Programs

Current Activities:

FSA’s major program areas are:

• Farm Loans – FSA’s farm loan programs provide direct loans or loan guarantees to family f